Automated trading — Using software to place trades without manual input, which firms permit, restrict, or prohibit depending on the strategy type.
How automated trading works in prop trading
Policies fall into three broad camps. Some firms permit automation outright. Some permit semi-automation — a bot that manages exits or trails a stop on a manually entered trade — while prohibiting fully automated entries. Some prohibit it entirely. Where automation is permitted, latency-arbitrage and exploit-style strategies are still excluded under separate rules.
Two practical points. First, commercially sold bots are often specifically named as prohibited, because a firm cannot distinguish many accounts running the same purchased system from a coordinated group. Second, a permitted bot is still bound by every other rule — a system that ignores the flatten deadline or overshoots the contract cap breaches the account exactly as a human would.
Key points
- Three common stances: fully permitted, semi-automation only, or prohibited.
- Off-the-shelf commercial bots are frequently excluded even where custom automation is allowed.
- Latency arbitrage and exploit strategies are banned separately from ordinary automation.
- An automated system must still respect flatten times, contract caps, and news windows.
Also known as
- algo trading
- EA trading
- bot trading
- expert advisor
Frequently asked questions
Can I use a trading bot with a prop firm?
At firms that permit automation, yes — and several market it as a feature. Read whether the permission covers fully automated entries or only trade management, and whether commercially purchased systems are excluded.
Do prop firms allow expert advisors?
Policies vary and the same firm may treat a custom EA differently from a widely sold one. Where EAs are allowed, the usual conditions are that the strategy is your own, is not a latency or arbitrage exploit, and respects every standard account rule.
Put this into practice
Automated trading is described here as a plain-language educational definition. Firms, platforms, and account programs may apply different conditions or calculations. Verify the current official terms before using this definition to make an account decision.